There has been a spike in oil & gas mergers and takeovers in recent months as sellers expectations of a return to $100/barrel oil prices have finally faded.
While crude has recovered, “there seems to be an increasing consensus that oil will not go back to over $100 any time soon,” said Philipp Chladek, a senior industry analyst for BI in London. “So the differing perceptions about the asset values that, next to the volatility, was the main deal-breaker in the past, are gradually converging.”
Light crude prices have rallied from early 2016 lows to test resistance above $50/barrel. December futures retreated from $52/barrel but this does not seem to indicate a reversal. Breakout above $52 would signal a long-term up-trend with a test of resistance around $64/barrel. With slow global growth, however, further consolidation below $52 is more likely.
From Tsvetana Paraskova at Oilprice.com:
Earlier this week, the Russian Economy Ministry said that it expected crude oil prices to remain stable at their current range of US$45-50 over the next two years, with a sustainable improvement beginning in late 2017.
The latest rally in prices, according to a statement by the ministry, has “a speculative nature” and will not last long. The Economy Ministry went on to add in the statement that oil fundamentals were moving in line with “basic forecasts”; that is, the market is on its way to rebalancing, with the glut gradually easing. But this process will take time.